INDIANA, Pa. -- S & T Bancorp, Inc.
(Nasdaq: STBA - News) today announced earnings for the third quarter and year-to-date
2006. Diluted earnings per share were $0.57 in the third quarter of 2006 as
compared to $0.54 for the third quarter of 2005, representing a 6 percent
increase. Net income was $14.7 million in the third quarter of 2006, as
compared to $14.4 million for the same period of 2005. Annualized return on
average assets and return on average equity was 1.77 percent and 16.95
percent, respectively, for the three months ended September 30, 2006, compared
to 1.84 percent and 16.22 percent for the three months ended September 30,
2005.
For the nine months ended September 30, 2006, net income totaled $40.1
million and diluted earnings per share were $1.54, compared to $43.7 million
of net income and $1.63 diluted earnings per share for the nine months ended
September 30, 2005. Annualized return on average assets and return on average
equity for the nine months ended September 30, 2006 were 1.65 percent and
15.40 percent, respectively, compared to 1.91 percent and 16.64 percent for
the same period in 2005.
James C. Miller, chairman and chief executive officer commented, "I am
pleased with our performance this quarter given the net interest income
challenges presented by an inverted yield curve. Especially encouraging is
the continued expansion of fee revenue sources in retail, insurance and wealth
management activities".
Net interest income, on a fully taxable equivalent basis, increased by
approximately $0.5 million or 2 percent for the third quarter of 2006 as
compared to $29.5 million for the same period of 2005. Net interest income on
a fully taxable equivalent basis for the nine months ended September 30, 2006
was $88.4 million, as compared to the $87.1 million for the nine months ended
September 30, 2005. The net interest margin, on a fully taxable equivalent
basis for 2006, was 3.87 percent, 3.82 percent and 3.88 percent for the third
quarter, second quarter and nine months ended September 30, respectively. For
the same periods in 2005, the net margin was 4.03 percent, 4.10 percent and
4.07 percent, respectively.
Earning assets have increased $138.9 million over the past 12 months,
primarily driven by a $148.9 million or 8 percent increase in commercial
lending. Loan balances decreased $7.1 million in third quarter 2006 as
compared to the second quarter 2006 primarily due to a significant number of
seasoned commercial real estate credits refinancing in the secondary market.
Investment securities were reduced over the same 12-month period by $68.1
million. Deposits increased $229.5 million or 10 percent over the same
12-month period.
Noninterest revenue, excluding investment security gains, increased 11
percent or $2.6 million for the nine-month period ended September 30, 2006, as
compared to the same year ago period, primarily due to revenue increases in
retail, wealth management, insurance, letters of credit and debit/credit card
activities. Offsetting these increases was a $0.6 million reduction in
mortgage banking revenues due to the slowing of residential mortgage lending
activities in the market.
Equity security gains for the first nine months of 2006 were $4.3 million,
a $0.5 million increase from the same period of 2005 due to more market
opportunities this period and strategic repositioning of the portfolios. The
equity securities portfolio has a market value of $55.8 million and net
unrealized gains of $16.6 million at September 30, 2006, as compared to values
of $65.1 million and $19.7 million, respectively, at December 31, 2005.
Noninterest expense increased $4.3 million or 9 percent for the first nine
months of 2006 as compared to the 2005 period. Salaries and employee benefit
expense increased $1.1 million, or 4 percent, for the first nine months of
2006 as compared to the 2005 period due to the impact of normal merit
increases, the addition of 19 average full-time equivalent staff to implement
new strategic initiatives and expand retail facilities and the effect of
implementing Financial Accounting Standards Board Statement No. 123®,
"Share-Based Payment".
Occupancy and equipment expense was relatively unchanged during the 2006
year-to-date period. Data processing expense increased $0.4 million as a
result of new and expanded product offerings.
Other expenses increased $2.6 million during the nine-month period ending
September 30, 2006 as compared to the same period of 2005. The major
components of the increases between the periods are $0.9 million of write-
downs for properties acquired through foreclosure, a $0.5 million contribution
to the S & T Charitable Foundation, $0.4 million of revenue received in 2005
for a historical rehabilitation tax credit partnership, $0.2 million of
increased legal expense, a $0.1 million sales and use tax refund received in
2005 and $0.4 million increase in the reserve for unfunded commitments.
The efficiency ratio, which measures noninterest expense to noninterest
income, excluding security gains, plus net interest income on a fully taxable
equivalent basis, was 44 percent and 42 percent, respectively for the nine-
month periods ended September 30, 2006 and 2005.
Asset quality continues to be an important area of focus. Nonperforming
assets totaled $17.7 million or 0.54 percent of total assets at September 30,
2006 as compared to $24.5 million or 0.74 percent at June 30, 2006 and $14.9
million or 0.47 percent at December 31, 2005. Net loan charge-offs for the
first nine months of 2006 were $12.4 million or 0.64 percent of average loans
on an annualized basis compared to $0.7 million or 0.04 percent for the first
nine months of 2005.
Included in third quarter 2006 net charge-offs is $7.2 million for a
commercial credit that was classified as nonperforming in the second quarter
2006 and assigned a specific allowance for loan loss reserve of $7.1 million
at that time. The remaining $6.0 million loan balance for the credit is
believed to be adequately collateralized.
The allowance for loan losses at September 30, 2006 was $32.7 million or
1.25 percent of total loans as compared to $36.6 million or 1.47 percent at
December 31, 2005. In the third quarter of 2006, S &T recorded a provision
for loan loss of $1.4 million as compared to a provision for loan loss of $3.0
million in the third quarter of 2005. For the nine months ended September 30,
2006, the provision for loan loss was $8.6 million as compared to $3.5 million
for the nine months ended September 30, 2005. The provision for loan loss is
based upon management's detailed quarterly analysis of the adequacy of the
allowance for loan losses.
Miller added, "We continue to be very aggressive in dealing with potential
problem loans. This is especially important since our commercial lending
niche is a high growth component of our relationship banking strategy".
S & T Bancorp, Inc. declared a common stock quarterly dividend of $0.29
per share on September 18, 2006 which is payable on October 25, 2006 to
shareholders of record as of September 29, 2006. This dividend represents a 4
percent increase over the $0.28 per share quarterly dividend declared a year
ago and a 4 percent projected annual yield utilizing the September 29, 2006
closing market price of $32.50. During the third quarter 2006, S & T Bank
issued $25 million of junior subordinated debt securities in a pooled
transaction at a rate of 6.78 percent.
The S & T Bancorp, Inc. Board of Directors previously authorized a stock
buyback program for 2006 of up to one million shares, or approximately 4
percent of shares outstanding. During 2006, S & T repurchased 999,000 shares
under this program at an average cost of $34.20 per share. On October 16,
2006, the S & T Bancorp, Inc. Board of Directors authorized a new stock
buyback program until September 30, 2007 of an additional one million shares.
Headquartered in Indiana, PA, S & T Bancorp, Inc. operates 49 offices
within Allegheny, Armstrong, Blair, Butler, Cambria, Clarion, Clearfield,
Indiana, Jefferson and Westmoreland counties. With assets of $3.3 billion, S
& T Bancorp stock trades on the NASDAQ Global Select Market under the symbol
STBA.
This information may contain forward-looking statements regarding future
financial performance which are not historical facts and which involve risks
and uncertainties. Actual results and performance could differ materially
from those anticipated by these forward-looking statements. Factors that
could cause such a difference include, but are not limited to, general
economic conditions, changes in interest rates, deposit flows, loan demand,
asset quality, including real estate and other collateral values, and
competition. This information should be read in conjunction with the audited
financial statements and analysis as presented in the Annual Report on Form
10-K for S & T Bancorp, Inc. and subsidiaries.
S&T Bancorp, Inc.
Consolidated Selected Financial Data
September 30, 2006
(Dollars in thousands, except per share data)
2005
March June September December
For the period: 1Q 2Q 3Q 4Q
Interest Income $39,466 $42,144 $44,035 $46,476
Interest Expense 12,148 13,780 15,595 17,991
Net Interest Income 27,318 28,364 28,440 28,485
Taxable Equivalent
Adjustment 975 1,002 1,024 1,041
Net Interest
Income (FTE) 28,293 29,366 29,464 29,526
Provision For Loan Losses 800 (300) 3,000 1,500
Net Interest Income
After Provisions (FTE) 27,493 29,666 26,464 28,026
Security Gains, Net 1,668 801 1,300 1,239
Service Charges and Fees 2,181 2,338 2,504 2,564
Wealth Management 1,643 1,831 1,760 1,743
Insurance 1,403 1,387 1,403 1,492
Other 2,196 2,829 2,440 2,663
Total Other Income 7,423 8,385 8,107 8,462
Salaries and Employee Benefits 8,798 8,440 8,754 8,723
Occupancy and Equip.
Expense, Net 2,290 1,939 1,892 1,946
Data Processing Expense 1,035 1,092 1,046 1,117
FDIC Expense 74 75 71 72
Other 3,881 3,940 2,899 4,380
Total Other Expense 16,078 15,486 14,662 16,238
Income Before Taxes 20,506 23,366 21,209 21,490
Taxable Equivalent Adjustment 975 1,002 1,024 1,041
Applicable Income Taxes 5,711 6,871 5,818 5,886
Net Income $13,820 $15,493 $14,367 $14,563
Per Common Share Data:
Shares Outstanding
at End of Period 26,584,029 26,200,529 26,364,095 26,270,730
Average Shares Outstanding
- Diluted 26,951,090 26,644,682 26,618,216 26,542,511
Net Income - Diluted $0.51 $0.58 $0.54 $0.55
Dividends Declared $0.28 $0.28 $0.28 $0.29
Book Value $13.06 $13.09 $13.35 $13.41
Market Value $35.40 $36.10 $37.80 $36.82
2006
March June September
For the period: 1Q 2Q 3Q
Interest Income $47,884 $50,957 $53,028
Interest Expense 19,810 22,830 24,186
Net Interest Income 28,074 28,127 28,842
Taxable Equivalent Adjustment 1,068 1,117 1,146
Net Interest Income (FTE) 29,142 29,244 29,988
Provision For Loan Losses 1,500 5,700 1,352
Net Interest Income
After Provisions (FTE) 27,642 23,544 28,636
Security Gains, Net 1,809 1,244 1,210
Service Charges and Fees 2,452 2,657 2,666
Wealth Management 2,223 2,058 1,854
Insurance 1,738 1,572 1,759
Other 2,261 2,803 2,432
Total Other Income 8,674 9,090 8,711
Salaries and Employee Benefits 9,512 9,004 8,618
Occupancy and Equip. Expense, Net 2,087 1,962 2,194
Data Processing Expense 1,164 1,249 1,186
FDIC Expense 75 75 77
Other 4,101 4,983 4,264
Total Other Expense 16,939 17,273 16,339
Income Before Taxes 21,186 16,605 22,218
Taxable Equivalent Adjustment 1,068 1,117 1,146
Applicable Income Taxes 5,881 4,251 6,408
Net Income $14,237 $11,237 $14,664
Per Common Share Data:
Shares Outstanding at End of Period 26,083,980 25,690,880 25,303,774
Average Shares Outstanding - Diluted 26,448,765 26,038,892 25,753,722
Net Income - Diluted $0.54 $0.43 $0.57
Dividends Declared $0.29 $0.29 $0.29
Book Value $13.41 $13.14 $13.24
Market Value $36.58 $33.23 $32.50
Nine Months Ended
September September
For the period: 2006 2005
Interest Income $151,869 $125,646
Interest Expense 66,826 41,523
Net Interest Income 85,043 84,123
Taxable Equivalent Adjustment 3,331 3,002
Net Interest Income (FTE) 88,374 87,125
Provision For Loan Losses 8,552 3,500
Net Interest Income
After Provisions (FTE) 79,822 83,625
Security Gains, Net 4,263 3,769
Service Charges and Fees 7,775 7,023
Wealth Management 6,135 5,234
Insurance 5,069 4,193
Other 7,497 7,465
Total Other Income 26,476 23,915
Salaries and Employee Benefits 27,134 25,992
Occupancy and Equip. Expense, Net 6,243 6,121
Data Processing Expense 3,599 3,172
FDIC Expense 227 220
Other 13,349 10,721
Total Other Expense 50,552 46,226
Income Before Taxes 60,009 65,083
Taxable Equivalent Adjustment 3,331 3,002
Applicable Income Taxes 16,540 18,400
Net Income $40,138 $43,681
Per Common Share Data:
Shares Outstanding at End of Period 25,303,774 26,364,095
Average Shares Outstanding - Diluted 26,078,260 26,737,136
Net Income - Diluted $1.54 $1.63
Dividends Declared $0.87 $0.84
Book Value $13.24 $13.35
Market Value $32.50 $37.80
S&T Bancorp, Inc.
Consolidated Selected Financial Data
September 30, 2006
(Dollars in thousands)
2005
March June September December
Asset Quality Data 1Q 2Q 3Q 4Q
Nonaccrual Loans and
Nonperforming Loans $7,331 $5,944 $8,368 $11,166
Assets acquired through
foreclosure or repossession 1,536 945 1,908 3,712
Nonperforming Assets 8,867 6,889 10,276 14,878
Allowance for Loan Losses 34,339 33,525 36,093 36,572
Nonperforming Loans / Loans 0.32% 0.25% 0.35% 0.45%
Allowance for Loan
Losses / Loans 1.48% 1.40% 1.50% 1.47%
Allowance for Loan Losses
/ Nonperforming Loans 468% 564% 431% 328%
Net Loan Charge-offs
(Recoveries) 723 (455) 432 1,021
Net Loan Charge-offs
(Recoveries) (annualized)/
Average Loans 0.13% -0.08% 0.07% 0.17%
Balance Sheet (Period-End)
Assets $3,027,881 $3,095,177 $3,104,433 $3,194,979
Earning Assets 2,841,330 2,900,582 2,909,863 2,986,081
Securities 522,631 509,985 499,545 494,575
Loans, Gross 2,318,699 2,390,598 2,410,318 2,491,506
Total Deposits 2,168,932 2,208,204 2,306,604 2,418,884
Non-Interest Bearing
Deposits 404,557 409,721 417,894 435,672
NOW, Money Market &
Savings 904,809 922,923 965,625 1,050,104
CD's $100,000 and over 187,010 201,076 210,024 206,666
Other Time Deposits 672,556 674,484 713,061 726,442
Short-term borrowings 399,846 410,362 314,467 287,829
Long-term Debt 61,115 81,080 83,860 83,776
Shareholder's Equity 347,279 342,852 351,983 352,421
Balance Sheet
(Daily Averages)
Assets $2,998,237 $3,061,157 $3,090,488 $3,141,728
Earning Assets 2,813,642 2,869,845 2,897,199 2,947,840
Securities 518,872 516,704 504,806 495,676
Loans, Gross 2,294,699 2,353,141 2,381,551 2,452,165
Deposits 2,157,201 2,188,288 2,269,085 2,348,991
Shareholder's Equity 353,472 347,871 351,432 353,373
2006
March June September
Asset Quality Data 1Q 2Q 3Q
Nonaccrual Loans and
Nonperforming Loans $13,063 $21,824 $15,058
Assets acquired through foreclosure
or repossession 3,084 2,725 2,633
Nonperforming Assets 16,147 24,549 17,691
Allowance for Loan Losses 37,402 38,575 32,717
Nonperforming Loans / Loans 0.51% 0.83% 0.58%
Allowance for Loan Losses / Loans 1.47% 1.47% 1.25%
Allowance for Loan Losses /
Nonperforming Loans 286% 177% 217%
Net Loan Charge-offs (Recoveries) 670 4,528 7,210
Net Loan Charge-offs (Recoveries)
(annualized)/Average Loans 0.11% 0.70% 1.09%
Balance Sheet (Period-End)
Assets $3,250,246 $3,301,896 $3,278,710
Earning Assets 3,031,270 3,079,808 3,048,744
Securities 482,453 455,367 431,490
Loans, Gross 2,548,817 2,624,441 2,617,254
Total Deposits 2,470,151 2,496,909 2,536,092
Non-Interest Bearing Deposits 417,315 442,203 429,547
NOW, Money Market & Savings 1,136,810 1,169,278 1,201,254
CD's $100,000 and over 200,055 203,966 249,070
Other Time Deposits 715,972 681,462 656,221
Short-term borrowings 204,487 234,232 162,351
Long-term Debt 171,635 186,427 186,217
Shareholder's Equity 349,896 337,598 335,011
Balance Sheet (Daily Averages)
Assets $3,205,843 $3,282,972 $3,285,807
Earning Assets 2,999,871 3,070,286 3,070,573
Securities 485,935 469,472 453,128
Loans, Gross 2,513,936 2,600,814 2,617,445
Deposits 2,424,946 2,494,841 2,518,761
Shareholder's Equity 356,341 346,351 343,176
S&T Bancorp, Inc.
Consolidated Selected Financial Data
September 30, 2006
(Dollars in thousands, except per share data)
2005
Profitability March June September December
Ratios (annualized) 1Q 2Q 3Q 4Q
Return on Average Assets 1.87% 2.03% 1.84% 1.84%
Return on Average
Shareholder's Equity 15.86% 17.86% 16.22% 16.35%
Yield on Earning Assets (FTE) 5.84% 6.04% 6.18% 6.40%
Cost of Interest Bearing Funds 2.27% 2.46% 2.73% 3.07%
Net Interest Margin (FTE)(4) 4.08% 4.10% 4.03% 3.97%
Efficiency Ratio (FTE)(1) 45.02% 41.02% 39.02% 42.75%
Capitalization Ratios
Dividends Paid to Net Income 51.96% 48.16% 51.08% 50.69%
Shareholder's Equity to Assets
(Period End) 11.47% 11.08% 11.34% 11.03%
Leverage Ratio (2) 9.68% 9.27% 9.56% 9.50%
Risk Based Capital - Tier I (3) 10.86% 10.29% 10.73% 10.52%
Risk Based Capital - Tier II (3) 12.52% 11.89% 12.35% 12.09%
2006
Profitability March June September
Ratios (annualized) 1Q 2Q 3Q
Return on Average Assets 1.80% 1.37% 1.77%
Return on Average Shareholder's Equity 16.20% 13.01% 16.95%
Yield on Earning Assets (FTE) 6.62% 6.81% 7.00%
Cost of Interest Bearing Funds 3.37% 3.71% 3.90%
Net Interest Margin (FTE)(4) 3.93% 3.82% 3.87%
Efficiency Ratio (FTE)(1) 44.79% 45.06% 42.22%
Capitalization Ratios
Dividends Paid to Net Income 53.53% 67.41% 50.81%
Shareholder's Equity to Assets
(Period End) 10.77% 10.22% 10.22%
Leverage Ratio (2) 9.28% 8.75% 8.57%
Risk Based Capital - Tier I (3) 10.30% 9.78% 9.65%
Risk Based Capital - Tier II (3) 11.86% 11.32% 11.94%
Year-to-date
Profitability September September
Ratios (annualized) 2006 2005
Return on Average Assets 1.65% 1.91%
Return on Average Shareholder's Equity 15.40% 16.64%
Yield on Earning Assets (FTE) 6.82% 6.02%
Cost of Interest Bearing Funds 3.66% 2.49%
Net Interest Margin (FTE)(4) 3.88% 4.07%
Efficiency Ratio (FTE)(1) 44.02% 41.71%
Definitions:
(1) Recurring non-interest expense divided by recurring non-interest
income plus net interest income, on a fully taxable equivalent basis.
(2) Equity less goodwill to total assets and allowance for loan losses.
(3) Effective October 1, 1998, banking regulators require financial
institutions to include 45% of the pretax net unrealized holding
gains on available for sale equity securities in Tier 2 capital.
(4) Net interest income, on a fully taxable equivalent basis,
annualized divided by quarter to date average earning assets.
